Gulf of Mexico Oil Spill Blog World Hunger Biofuels Commodity Speculation

World Hunger

Hemp BioFuel

Hemp BioFuel

Food, food, everywhere and not enough to eat

by ANDREW SIA

And yet, there isn’t enough for everyone to eat.

FOOD prices around the world have already risen this year to within touching distance of the 2008 food crisis – and come this October, the world’s population is expected to hit 7 billion souls. Will there be enough food to feed the world?

And will the world see more social unrest? In 2008, surging food costs sparked protests and riots in more than 30 countries; this year, many commentators believe this has aggravated the political turmoil in Tunisia and Egypt.

Many media reports have blamed food price hikes on climate change and Asia’s increasing wealth.

It is true that severe droughts in Russia and China and floods in Australia, Europe, India, and Pakistan have affected crops.

Prof Fatimah Mohamed Arshad of Universiti Putra Malaysia’s Institute of Agricultural and Food Policy Studies, says that the threat of climate change affecting food supplies may indeed have to be considered in a country’s long food production plans.

“The world’s poor suffer the most during high food prices as they spend up to 80% of their income on food.” (See The Hunger Map on SM5.)

And yes, the other reason touted – often by the Western world – for rising food costs, Asia’s increasing wealth, might be borne out by the fact that increasingly affluent consumers in China and India are eating more meat; 7kg of grain are fed to cows to produce 1kg of beef for human consumption, thus diverting supplies of corn and wheat from feeding people to feeding livestock.

Environmentalist and author George Monbiot has pointed out that the supply of meat has already trebled since 1980: farm animals now take up 70% of all agricultural land and eat one-third of the world’s grain.

But climate havoc and meat-eating are just part of the explanation. Olivier de Schutter, the United Nations Special Rapporteur on the Right to Food, underlined at a media briefing in September that while the “initial sparks” of food price hikes may have been caused by such issues of supply and demand, the deeper reason is speculation on food commodities by powerful investors, such as hedge funds and investment banks.

For instance, he noted that in July 2010, Armajaro, a London-based hedge fund, purchased US$1bil (RM3.06bil) worth of futures contracts for 241,000 tonnes of cocoa, equivalent to almost all the cocoa in Europe’s warehouses!

(A futures contract is an agreement to buy or sell a particular commodity at a pre-determined price in the future.)

“That such hoarding is permitted in this day and age stretches belief,” said De Schutter.

He added that such speculation also caused the price of rice to leap by 165% between April 2007 and April 2008, something that could not be explained by supply and demand factors.

On Feb 15 this year, World Bank president Robert Zoellick warned that the rising cost of food around the globe had pushed about 44 million people into poverty since the middle of last year, with wheat prices doubling between June 2010 and January 2011, while corn prices rose 73% in the same period.

Yet, as David Dapice, associate professor of economics at America’s Tufts University points out, the world is actually producing more food! Shouldn’t an increased supply of a commodity drive prices downwards?

In a Feb 18 YaleGlobal article, he notes that from 2006/07 to 2010/11, the US Department of Agriculture estimates global production of rice, wheat, corn, soya and other grains rose from 1.78 to 1.96 billion tonnes, an increase of 10%.

“World population grew less than 5% in those years, so output is rising more than twice as fast as population. (So) it’s hard to argue that bad weather has driven food prices up when the world has more food per capita than before.”

A Jan 23 article in British newspaper The Observer summed it up: “Food speculation – people die from hunger while banks make a killing on food.”

The article explained that, following heavy lobbying by banks, hedge funds, and free market politicians in America and Britain, regulations on commodity markets have been steadily abolished in the past decade. Contracts to buy and sell food items were turned into “derivatives” that could be bought and sold among traders who have nothing to do with agriculture. In 2006, driven by the US sub-prime mortgage banking disaster, banks and traders around the globe stampeded to move billions of dollars into “safe commodities” such as food.

Biofuel bump

While Prof Fatimah agrees that such speculators are one cause of price hikes, she points out that there is another cause: the diversion of over 100 million tonnes of corn (one-third of the entire US crop!) from satisfying human hunger “to satisfying the thirst for fuel” for vehicles in developed economies (corn is used to make ethanol, a biofuel). Since biofuel crops are more profitable, fewer food crops, such as wheat, are grown.

According to Prof Fatimah, this demand for biofuel was “politically created” worldwide through government subsidies.

The Pesticide Action Network of North America (panna.org) sums it up well:

“Hunger in an age of plenty isn’t a problem of amounts produced. It’s a matter of priorities,” says its website, noting that the 107 million tonnes of grain that went to “feed cars” could have fed 330 million people or about one-third of the world’s hungry for a year. That’s one-third of 925 million under- or malnourished people in 2010, according to Food and Agriculture Organisation estimates.

According to a CNN report (tinyurl.com/4nn7oap), at a world food security summit in 2009, UN secretary-general Ban Ki-moon said that somewhere in the world, a child dies of hunger every five seconds – even though the planet has more than enough food for all.

And it’s disturbing that in the world’s richest and most powerful country, 1 in 6 Americans have to deal with hunger and need food aid, according to the website FeedingAmerica.org.

It is a myth that the world (and it’s growing population) “does not have enough food” to feed everybody. S.M Idris, president of the Consumer’s Association of Penang, points out that according to the United Nation’s Food and Agricultural Organisation, world agriculture produces 2,720 kilocalories (kcal) per person per day, while an average person needs only 2,000 kcal a day.

“There is enough food to feed the world’s people. The main reason for hunger is that poor people cannot afford to buy it.”

Economics, rather than hunger, often determines policy. Columnist Coomi Kapoor wrote in The Star last September that in India, when huge mounds of surplus food grains were rotting out in the open, the Supreme Court ordered the Indian government to distribute them for free. Since 40% of the population live below the poverty line at less than US$1 (RM3.06) a day, this seemed to make sense. Yet Food Minister Sharad Pawar countered that the government could not do that as it would disrupt the country’s “food economy” – prices of wheat and rice would crash, thus adversely affecting the growers.

On Jan 22 this year, 48 agriculture ministers meeting in Berlin decried excessive price speculation on global food markets.

“Food markets should not be the object of gamblers,” said German Agriculture Minister Ilse Aigner in a report by news agency Bloomberg. “Food and agricultural commodities are not like anything else. Sometimes it’s about pure survival.”

Bruno Le Maire, the Agriculture Minister of France, pointed out speculation is ripe to happen as financial-agricultural markets are now 15 times bigger than real world global cereal production. He added that food speculation ruins farmers and heightens the risk of food riots in poorer countries: “It enriches a lot of people but impoverishes the rest of the planet,” he said.

Nature’s not to blame?

The US-based Institute for Food and Development, also known as Food First (foodfirst.org), says that it’s also a myth that nature (ie, droughts, floods, climate change, etc) is responsible for starvation.

“It’s too easy to blame nature. Food is always available for those who can afford it – starvation during hard times hits only the poorest. Millions live on the brink of disaster because they are deprived of land by a powerful few, trapped in the grip of debt, or miserably paid. Natural events rarely explain deaths; they are simply the final push over the brink.

“Human institutions and policies determine who eats and who starves during hard times. Likewise, in America many homeless die from the cold every winter, yet ultimate responsibility doesn’t lie with the weather. The real culprits are an economy that fails to offer everyone opportunities, and a society that places economic efficiency over compassion.”

Lester Brown, founder of sustainability NGO Earth Policy Institute (earth-policy.org), noted last month that richer countries such as China and Middle Eastern oil producers have reacted to the possibility of food shortages by buying up vast tracts of land in poorer parts of the world, such as sub-Saharan Africa and parts of South-East Asia, for food production.

Is this the way to solve global hunger? At last month’s World Social Forum in Dakar, Senegal, there were many stories from Brazil, the Congo, India, Madagascar, and Mozambique about peasant farmers being pushed off their lands by big corporate “investors”, often with government approval.

“The spectre of a hungry world is being used to push the agenda for industrial agriculture,” says Gisele Henriques, a Brazilian food and agriculture advocate who attended the summit.

“But in reality, the majority of the land is used for producing animal feed and biofuels for cars, as well as land speculation, rather than food crops,” she wrote in Britain’s Guardian newspaper on Feb 12.

She points out that a World Bank report on land acquisitions shows that only 37% of the land acquired is used to grow food. Yet most governments desire foreign direct investment for a narrowly defined concept of “economic growth” which sidelines small farmers, who are considered “economically inefficient” because they feed “only” their own communities and not the global market!

De Schutter told the UN General Assembly last October that the farmland of smallholders is shrinking year after year.

“Farmers are often relegated to soils that are less fertile – that are arid, hilly or without irrigation. This poses a direct threat to the right to food of rural populations.”

He underlined that indigenous people who have “communal ownership” of their lands are particularly vulnerable to this.

Indeed, we have our own example of this in Sarawak, where numerous court cases have been filed over the past 15 years as the Ibans and others who practice traditional farming try to claim “native customary rights” to their lands, which are also wanted by large oil palm companies.

In her home country Brazil, Henriques has seen the adverse social effects of the large-scale agricultural development model.

“Half of agricultural production is going to soy and sugar cane, to feed animals and cars, not people.”

While Brazil increased its soya bean exports, the Amazon was deforested and traditional communities were displaced, resulting in a massive rural exodus to urban slums. Yet it is the small farmer that feeds Brazil, with 60% of the food consumed nationally coming from family farms, according to the country’s 2006 Agricultural Census, notes Henriques.

In other words, having enough food is about having access to resources, be it salaries for urban people or land for rural folk. While it is true that climate change does pose a threat to agriculture, ultimately it is political and economic fairness that determine food security, for the poor and powerless often go hungry while the rich can eat exotic air-flown foods.

Democratic food

The Pesticide Network summarises that people are hungry because the “global food system” is out of control – it prioritises corporate profits over actually feeding people. Food security is therefore really about “food democracy”.

Its website, panna.org, lists numerous successful cases of food democracy, such as the US-based Farm to School Network or Brazil’s city of Belo Horizonte, as examples of how even the poor can eat when people at the grassroots, rather than large corporations, have control over farms and food. In other words, food of, by and for the people.

“What unites them is shared priorities: feed people first and let farmers work the land. What results is democratic decision-making about food and agriculture.”

The danger of ignoring food security is this: hungry people can become angry people. And that’s when they will strike back at the system they perceive is working against them, as the worldwide food riots of 2008 and the recent troubles in Tunisia and Egypt have shown.

Idris of CAP says, “The best way to ensure global food security is to give priority to developing people’s needs rather than people’s greed. For example, nature gave us abundant free fish resources. Why do we scrape our seabeds with trawlers and destroy fish-breeding grounds (which then affects the smaller fishermen who can’t afford big boats)?

“If we do not distribute wealth more evenly, all of us, not just the poor, will suffer. Our social fabric will disintegrate and it is already happening around us in many parts of the world.”

source: Food, food, everywhere and not enough to eat

Editors note: Hemp as Biofuel

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1 Response to Gulf of Mexico Oil Spill Blog World Hunger Biofuels Commodity Speculation

  1. Sarah says:

    Andrew,

    Nice post. Thanks for the mention.

    Sarah
    Feeding America
    http://feedingamerica.org/

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